Statement by Tan Sri Md Nor Yusof, Chairman Malaysia Airlines
RECOVERY OF AIRLINES IS TOP PRIORITY
On behalf of my colleagues on the Board of Directors of Malaysia Airlines, I wish to place on record our commitment and support for the Management Team of Malaysia Airlines, led by Group Chief Executive Officer Ahmad Jauhari Yahya.
Malaysia Airlines recorded a significant net loss of RM2.5 billion in 2011, at a crucial juncture in time when airlines globally are challenged by intense competition, high fuel costs and spreading economic instabilities.
These negative factors for the global airline industry have been building up over several years. In the last decade, numerous national carriers have failed because of this changing environment and finding a viable and sustainable business model has been a challenge. Certainly, the market is punitive for those airlines on a weak footing.
The Board identified structural weaknesses in Malaysia Airlines in early 2011 and initiated a series of proactive measures to contain losses and strengthen the company for recovery and sustained future performance. A key foundation stone of this plan was the August 2011 Comprehensive Collaboration Framework (CCF) involving a share swap between Khazanah Nasional Berhad and Tune Air, a collaboration agreement between Malaysia Airlines, AirAsia and AirAsia X, and a restructure of the Malaysia Airlines Board and Management Team.
Subsequent to these changes, the Board and Management Team has endorsed a Business Plan for the recovery and sustained future performance of Malaysia Airlines. This is our top priority.
The Board is confident that the CCF will benefit both Malaysia Airlines and AirAsia by promoting synergies in many areas. Already, we are in the process of setting up joint-venture companies for procurement and training and a potential maintenance service provided by Malaysia Airlines Engineering for the AirAsia fleet.
I would like to be very clear in stating that the share swap is not part of the acute financial problems at Malaysia Airlines, it is part of the solution. Likewise, the collaboration agreement between Malaysia Airlines and AirAsia is not part of the acute financial problems at Malaysia Airlines. It is part of the solution.
is a small nation on the world stage, but we have the benefit of two national champions in aviation. Our ultimate belief is that we have the opportunity to promote two national champions and build economies of scale that will benefit Malaysia Airlines and AirAsia and Malaysian consumers. By strengthening Malaysia Airlines, we put the company back on its feet and give it a secure future.
I am writing in such a forthright manner because I have noted that our Business Plan has not been accepted by all of our stakeholders and has in fact met with turbulence in some sectors. This turbulence has the potential to distract the attention of Malaysia Airlines' Management Team and its 20,000 staff from the very crucial task at hand. That task is our top priority. It is the economic recovery and sustained future performance of Malaysia Airlines.
I know that Malaysia Airlines has a long history, and a special place in the hearts of many Malaysians. However, I ask you to take a long, hard look at the position of Malaysia Airlines in the intensely competitive global aviation business.
Malaysia Airlines must be allowed to focus on pulling itself out of its current financial crisis. Key initiatives in the Business Plan that will be undertaken within the next six months include strengthening revenue management, the launch of a new regional short-haul premium airline and the introduction of the new flagship Airbus A380 to our fleet. The company also needs to strengthen its balance sheet urgently and various options are being considered. At the same time, we will continue to work closely with the Malaysian Government to balance our commercial instincts and financial pressures with the Government's wider interests.
Do judge us on the results we deliver with our Business Plan, but please give the Management Team sufficient time to implement the Business Plan effectively. Similarly, to pass judgment on the CCF in general or the share swap in particular is premature at this juncture.
Malaysia Airlines is a very sick patient, and its condition is quite critical. Indeed, there are a full range of prescriptions available. Judge us by the result, not by the choice of prescription.
For and on behalf of the Board of Directors, Malaysia Airlines
Tan Nor Yusof
16 March 2012
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